ECONOMIC ANALYSIS
Complete this assignment in a Microsoft Word document, APA formatted and then submit it by midnight, Day 7. Your assignment should be about 2-3 pages, double spaced.
A computer company produces affordable, easy-to-use home computer systems and has fixed costs of $250. The marginal cost of producing computers is $700 for the first computer, $250 for the second, $300 for the third, $350 for the fourth, $400 for the fifth, $450 for the sixth, and $500 for the seventh.
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- Create a table that shows the company’s output, total cost, marginal cost, average cost, variable cost, and average variable cost.
- At what price is the zero-profit point? At what price is the shutdown point?
- If the company sells the computers for $500, is it making a profit or a loss? How big is the profit or loss? Sketch a graph with AC, MC, and AVC curves to illustrate your answer and show the profit or loss.
- If the firm sells the computers for $300, is it making a profit or a loss? How big is the profit or loss? Sketch a graph with AC, MC, and AVC curves to illustrate your answer and show the profit or loss.
